CBI Finds Strength in British Retail Sales

The Confederation of British Industry (CBI) monthly Distributive Trades Survey of 126 firms of which 60 were retailers, showed above-average sales for the time of year, with 40% of retailers reporting increased sales volumes in October on a year ago and 19% saying they were down.

The figures gave a balance of +21%, well above expectations of +7% and an improvement on the previous month's balance of -8%.

The expected sales balance for November also rose sharply to +21% from +7%, a level last seen in December, and orders placed with suppliers were the strongest since March, although they are expected to dip in November.

The volume of orders placed upon suppliers was broadly flat in October, having declined steadily during the previous six months, but orders are expected to fall further year-on-year in November.

There was a potentially important shift in sentiment surrounding the motor sector with a net balance of only 1% stating that sales volumes had increased from the previous year and this was the lowest figure since December 2013. Car sales have been extremely buoyant over the past few months and the latest data will spark some concerns that a near-term saturation point has been reached.

The rise in overall sales volumes was driven by retailers of clothing, furniture & carpets, and hardware, while sales by grocers and department stores were flat.

Retailers Key findings are: 40% of retailers said that sales volumes were up in October on a year ago, while 19% said they were down, giving a balance of +21%. This was above expectations (+7%), and an improvement on the previous month’s balance (-8%).

38% of respondents expect sales volumes to increase next month, with 18% expecting a decrease, giving a rounded balance of +21%. 26% of retailers placed more orders with suppliers than they did a year ago, while 29% placed fewer orders, giving a balance of -3%.

17% of businesses reported that their volume of sales for the time of year were good, while 10% said they were poor, giving a rounded balance of +6%. Growth in internet sales volumes picked up slightly over the year to October (+37%), compared with the previous month (+32%). Sales volumes growth was particularly robust in clothing (+71%), furniture & carpets (+83%), and hardware & DIY (+45%).

Motor traders finding; 36% of motor traders reported sales volumes were up on a year ago, while 35% said they were down, giving a balance of +1% - the lowest since December 2013. Sales volumes are expected to grow next month (+24%).

Rain Newton-Smith, Confederation of British Industry Chief Economist, said: “With our Indian Summer now a distant memory, shoppers have been pounding the high street, with sales of clothing and other retailers outpacing expectations.

“With employment still rising and the unemployment rate at an 11-year low, household spending still has some momentum in the short-term, but we do expect the fall in the value of the pound to push up prices through the course of next year, hitting people’s purchasing power.”